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Kanoodle Offers Cookies and a Slice of the Pie

If you pressed them, most bloggers would probably say that they maintain their online Web diaries primarily as a labor of love. Most of the 28.3 million blogs now out there grew out of someone’s gut sense that the world needed to know their thoughts on global warming, South Dakota tort law, or their cat Mr. Puffers.

Very few would say they blogged to turn a dollar. Which is what made it all the more interesting that sponsored-links provider Kanoodle announced a deal with Microsoft at the end of January that will give users of its free blogging tool MSN Spaces a chance to opt into the Kanoodle contextual network and earn some cash from the conversions.

Under the agreement, whose financial terms were not specified, Kanoodle will distribute its contextual ads to those MSN Spaces bloggers who want to run ads on their pages. The ads will be targeted based on their pertinence to the subject matter of the blogs. When a customer clicks through, the blogger will receive a percentage of the ad revenue generated.

Google has a similar deal that ties its Blogger tool users into its AdSense publishing network. And Kanoodle itself is already taking part in another deal to put contextual ads onto consumer-generated content, under an arrangement with Six Apart, which manages the Type Pad and LiveJournal blogging services.

Almost from the moment the MSN deal was announced, online marketing voices began questioning why Microsoft would strike a partnership to distribute outside ads on its pages when it is laboring mightily to launch its own adCenter paid-search ads rather than reselling Google sponsored links. According to Kanoodle CEO Lance Podell, his company has already done a good job monetizing MSN content pages on MSNBC.com and MSN Gamezone. The Spaces master services agreement calls for Kanoodle to place links on other MSN content sites in the future.

“There’s only so much that company can focus on as it’s rolling out adCenter,” he says. “They’re taking on a lot of work as they start out of the gate to compete against their largest competitors, who are in search ads. I think they realize we’ve been a really good solution for them for a while, and they want to continue the relationship.”

Buffalo NY-based Kanoodle has been an innovator in sponsored links since 2001, according to Podell. “We were the first to launch a behaviorally targeted sponsored links network; a locally targeted sponsored links network; the first to put text ads in RSS feeds and in blogs,” he says. “We’ve become recognized as the innovator on the content side of the house, and we’ve received started to gain ground on Google and Yahoo!” As content has become more important on the Web, those engines have evolved beyond their search marketing roots; but Podell says their infrastructures still don’t shift easily from paid search to other ad forms.

“Content pages are distinct from search pages,” Podell says. “In search, you can’t tell if someone who queries ‘windows’ is looking for home-repair pages or computer operating systems. So results pages serve both, and the effect can be some very irrelevant results.” And some inappropriate paid-search ads tied to those confusing keywords.

In some content pages, it’s very readily identifiable what the context of that page is, and the user is presumed to have a need for that information and to be interested in seeing ads related to that context. In other words, it’s easy to tell from context whether a viewer reading about “Windows” is looking at a page about carpentry or software, and the proper and relevant ad category can be easily served 100% of the time. But on those content pages, it’s all the more important to make sure that the ads relate to the context. “On a home-improvement site, an ad for Windows XP is not only wrong, it’s a little jarring and makes the Web site look weak—as if they don’t understand what their page is about,” Podell says.

At least, that’s true when a Web site generates enough page views to make advertisers want to market around it. “Contextual can sometimes lead you astray,” Podell adds, when Web content is highly focused without a correspondingly focused advertiser. For example, there are plenty of niche chess sites out there, but not a lot of would-be chess advertisers.

In those instances, the right content play is to know something else about those chess visitors: ideally, where they’ve been recently on the Internet and what other pages they’ve viewed. To do that, Kanoodle launched a cookie distribution program for its behavioral ad network. Visitors who come to a site in Kanoodle’s network receive a software cookie that assigns them to a behavioral segment, based on the content they’re viewing. Then when that viewer goes to a site that serves Kanoodle BehaviorTarget ads, they will see ads targeted for their specific behavioral segment.

Standard behavioral tactics, if a bit controversial in this age of third-party cookie deletion and Web-privacy jitters. But there’s a unique twist: In December, Kanoodle announced it would pay Web sites to distribute its cookies to visitors even if they did not show Kanoodle ads. Web site operators will earn 5% of the ad revenue booked when that cookie triggers a Kanoodle behavioral ad. In cases where more than one Kanoodle cookie is on a browser, the most recent one wins.

This innovative method of building the scaffolding for a behavioral network came about, Podell says, from listening to small Web publishers complain that they needed more revenue but were prevented from running more ads by their contracts with Google and other publisher networks. “We realized that what they could do was drop cookies for us, even if they couldn’t run our ads,” he says. “So we’re using these small publishers, as well as some large publishers [such as MarketWatch.com, USAToday.com, Autobytel.com and others] as a ready-made way to build out our cookie base for a behavioral ad network.”

One thing Podell says works in Kanoodle’s favor when talking to Web publishers is the “We’re not Google” argument. In October 2004 the company launched its self-service sponsored links program, known as BrightAds, on the theory that some Web publishers out there were chafing at the restraints imposed on their ad policies by the Google AdSense rules. “There was a list of 15 things they weren’t able to do under AdSense. So we launched with multiple ad units in the user interface, with the ability to change colors and to accept PayPal payments, always assuming that there will be enough publishers that drop off around the fringes of AdSense because they were frustrated.”

It’s an additional selling point to both publishers and advertisers that Kanoodle can enable them to run a mix of ad types: contextual where it’s effective, behavioral where not, and even locally targeted links matched to page content. The network may eventually expand to encompass rich media ads, too.

“The way we’ve built our network, any kind of ad unit can run through there,” Podell says. “The challenge is gaining scale in a world where Google is so big. With deals like MSN Spaces, we’ve found that we’re able to grow the BrightAds tool very quickly without going out and competing with Google, marketing dollar for marketing dollar. We’ve succeeded by finding partnerships.”

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